Nigeria Content Online

Hundreds of
customers of Union Bank of Nigeria were stranded in Enugu on Thursday,
following the strike embarked on by workers of the bank.

A News Agency of
Nigeria correspondent who visited branches of the bank at Okpara Avenue
and Ogui Road in Enugu,reported that some of the aggrieved customers
were seen at the bank premises looking helpless.Nkechi Onah, a customer
with the bank said that the strike which commenced on Tuesday had cost
her a lot, she said she needed money urgently to settle the hospital
bills of her daughter who was hospitalised.

Another customer,
Mr Nnamdi Okoh,lamented the hardship the customers had been subjected
to, saying that he will stop patronising the aggrieved bank after the
strike.

New vehicle imports
into Nigeria fell almost a quarter during the first 11 months of the
year as consumer credit, which dried up in the wake of last year’s
banking crisis, struggled to recover, importers said on Thursday.

Vehicle sales in
Africa’s most populous nation are a proxy measure for private
purchasing power, a leading economic indicator which is not formally
available in Nigeria.

Port figures showed
new vehicle imports fell to 32,409 units in the 11 months to November,
down 24 percent on the same period last year, according to Mohan Sethi,
general manager at Dana Motors, which imports Kia vehicles to Nigeria.

The rate of price
falls in Rwanda doubled in November, resulting in an inflation rate of
-5.38 percent from -2.28 percent in October, the National Institute of
Statistics of Rwanda (NISR) stated on Thursday.

The index fell 0.47
percent compared to the previous month,prices of food decreased by 3
percent, meat prices by 9.73 percent while non-alcoholic beverages
prices dropped by 6.04 percent, NISR said.

Prices in the landlocked central African nation have been on a
downward trend for a large part of the year on the back of good
supplies.

Mozambique’s
economy will likely grow by 7.2 percent in 2010, driven by a recovery
in external demand, the International Monetary Fund said.

In a statement
posted on the Mozambique’s Finance Ministry’s website on Thursday, the
IMF said Mozambique’s macroeconomic performance “has been strong
overall”, without giving an estimate for next year’s economic growth.

Kenya has increased its domestic borrowing target for the current
fiscal year by 14 percent to 120 billion shillings, to fund the
implementation of a new constitution, a senior finance ministry
official said.
Kenyans passed a new charter at a referendum in August which they hope
will overhaul how the country is run by defining a new political and
governance platform.
“We will borrow 120 billion as opposed to 105 billion, which we had
expected to borrow,” Joseph Kinyua, permanent secretary at the
Treasury, told Reuters.

Nigeria’s foreign
exchange reserves inched up to $33.4 billion by mid-December from $33.1
billion two weeks earlier, but remain 23 percent down a year ago, the
Central Bank said on Thursday.

President Goodluck
Jonathan said in his 2011 budget presentation to the National Assembly
on Wednesday that the reserves “remain comfortable”, but analysts and
diplomats have voiced alarm at their depletion from around $43.4
billion a year ago.

Nigeria’s public
finances are under scrutiny in the run-up to presidential,
parliamentary, and state governorship elections next April. The
country’s budget deficit is expected to top 6 percent this year and it
has spent billions of dollars of windfall oil savings.

Before the dust
settles on the recent tiff between the governor of the Central Bank of
Nigeria and the National Assembly over how much of federal spending on
salaries goes the latter’s way, and before an affliction of common
sense sweeps the detritus under the carpet, it helps to draw a line
under the lessons. The main learning point is the reassurance from the
public’s response to the exchange that the domestic moral space is
alive and thriving. Apparently, despite the seeming dominance of
corrupt practices, Nigerians still can tell the difference between
right and wrong.

First, concerning
the “wrongs”. Given the serious infrastructure worries faced by those
who just want to do honest business/work in this country, it is an
unconscionable misplacement of priorities that capital spending
continues to account for only a quarter of public sector expenditure.
Second, in the light of the many shortcomings of the domestic economy,
including rising unemployment, and soft domestic demand, it is both
inefficient and inequitable for a small section of the people to
account for so large a portion of the non-capital part of public
spending. Third, it is sad that the finance minister tried to play fast
and loose with a clear opportunity to address an important aspect of
the business of correcting obvious faults in the public expenditure
management framework. Fourth, the democratic space will suffer
severely, if elected officials react as viscerally as they did to the
CBN governor’s remarks, each time someone has cause to disagree with
their practice.

Obviously, the CBN
governor was right to have alluded to the problem; and one only needs
read the speech in which he broached the issue to put the whole hoopla
in proper context. He did even better for the public’s perception of
the integrity of our much-maligned cadre of public officers, by staring
down attempts by the legislators to force him into retracting his
claims. Overall, therefore, a completely wholesome result? Reputations
were strengthened, dubious processes re-examined and weak character
types exposed.

Yet there are
worries! There is one very important leg of the CBN’s ongoing reforms
to the financial services sector that the National Assembly still has
to enact: “The Banking Sector Resolution Cost Fund”. Nothing in our
recent past justifies us in the hope that our distinguished lawmakers
would rise above their personal feelings of affront at the CBN
governor’s chutzpah (“treason”, some even called it), and consider this
bill on its merit. Might we then need to remind us of the excitement
generated by the CBN governor’s daring in order to persuade the
necessary legislation?

Everyone agrees
that the CBN governor’s recent interventions on behalf of the banking
sector are justified because of the banks’ financial intermediation
function. We need the banks to work well to efficiently allocate
financial resources. There is little disagreement on the use of a bad
bank (the Asset Management Corporation of Nigeria ( AMCON) to clean up
the industry’s balance sheet. On the question of how to pay for AMCON’s
purchase of the dud loans on the banks portfolios, however, there has
been a lively debate. Originally, it was proposed that the CBN and the
finance ministry would fund AMCON’s activities in equal proportion.
However, in the bill that it may take to the national assembly, the CBN
is proposing to guarantee bonds issued by AMCON in pursuit of the
latter’s mandate to the tune of N500 billion over a ten year period,
while banks will provide the N1 trillion balance estimated to be
necessary for this purpose.

One argument
against the CBN’s arithmetic is that the resolution cost fund bill’s
requirement that banks part with the equivalent of thirty basis points
of their total assets is a burdensome tax on the performance of healthy
banks. In the alternative, it is proposed that a more equitable measure
would be to use banks’ revenues as a denominator for calculating their
obligations to the fund.

If we have learned anything from the CBN governor vs. National
Assembly episode, it is that we must resist any attempt by the National
Assembly to pussy foot on the passage of this bill by recourse to
excuses such as these. Ireland’s recent sovereign debt debacle
strengthens the case for recourse to banking sector funds for the
industry’s rescue, rather than the public purse.

The Federal Government has spent about N2.070 trillion on Petroleum Support Fund (PSF) subsidy in the last four years.

Abiodun
Ibikunle, executive secretary, Petroleum Products Pricing Regulatory
Agency (PPPRA), said this yesterday in Abuja, adding that the amount
covers between January 2006 and November 2010.

This
figure excludes N98.05 billion by the Federal Government on foreign
exchange differential payment as well as interest on delayed subsidy
payment to petroleum products marketers during the period.

Mr.
Ibikunle, while reviewing the downstream petroleum industry activities
for the fourth quarter, gave the assurance that the agency has made
adequate arrangements to ensure uninterrupted supply of petroleum
products during the festive period.

“A
market review by the agency by the middle of the quarter revealed that
some marketers were not responding to the need to bring in petroleum
products on time. Therefore, additional allocations were given to those
marketers that were active and had the capacity, in terms of resources
and storage facilities, to import, store, and ensure effective
distribution to consumers.

“With the arrangement, we do not expect there will be any shortage in supply throughout this period,” he said.

He
attributed the uninterrupted supply of petroleum products in the country
recently to the success of the PSF scheme, which was established in
2006 to help mitigate the negative impact of the volatility in the
international crude oil and products and stabilise the retail pump price
to consumers.

Prior
to the introduction of the PSF, the PPPRA secretary said the country
witnessed rapid increases in the prices of petroleum products, pointing
out that since the scheme was established, government has been able to
maintain stable fuel price regime at N65 per litre for the past two
years.

Though
the agency has been facing some challenges in the management of the
scheme, he expressed happiness that they have been taken care of,
particularly clearing the huge backlog of debt government owed petroleum
marketers for imported products.

“The
backlog of debts by government to marketers has now been cleared. The
huge debt was a major challenge to products supply, as most of the
marketers abandoned the PSF scheme and refused to bring in products
since they were not sure their money would be paid on time. To that
extent, the PSF scheme has succeeded in meeting government’s
objectives,” he said.

He said with the introduction of the sovereign debt instrument,
marketers have been assured the guarantee of prompt payment of subsidy
claims, adding that consultations are ongoing with all relevant bodies
on the issue of review of products pricing template, as demanded
recently by major marketers and Petroleum Tanker Owners Association
during a meeting in Abuja.

Following
the cash payment which the Nigerian Bottling Company (NBC), bottlers of
Coca Cola and other drinks, proposed to pay its shareholders as
compensation for the planned delisting exercise, the demand for the
stock has increased, hence, pushing up its value significantly.

The
price, which was N30.03 per share before the announcement was made on
Tuesday, now stands at N34.75 per share as at Thursday, representing an
increase of 15.72 percent in two days.

While
some market watchers suggested that the Nigerian Stock Exchange (NSE)
should have placed the company’s share on “technical suspension” to
protect price movement on the stock, the spokesperson for the NSE, Wole
Tokede, said he was not sure if the Exchange is considering that option.

The
management of the NBC had, on Tuesday, notified the Exchange of its
“proposed scheme of arrangement between the company and its members,
involving a cancellation of part of its share capital.”

The proposed scheme envisaged a cash payment of N43 per NBC share as consideration to the minority shareholders.

Market declines

Meanwhile,
the Exchange market capitalisation of the 201 first-tier equities
closed on Thursday at N7.807 trillion after opening the day at N7.830
trillion, reflecting 0.29 percent decline or N23 billion losses. The
market had gained N65 billion after Wednesday’s trading session.

The
NSE All-Share Index also lost 0.29 percent or 72.26 units on
Wednesday’s figures of 24,511.04 basis points, to close yesterday at
24,438.78. Zenith Bank, Guaranty Trust Bank, Dangote Sugar, and United
Bank for Africa were the most traded stocks on Thursday.

Gainers increase

A
total of 34 stocks appreciated in price on Thursday, higher than the 25
gainers recorded the previous day, while 28 stocks depreciated in
value; same as recorded on Wednesday. UAC Nigeria and Nigerian Bottling
Company topped the price gainers’ table with an increase of N1.80 and
N1.65 on their opening prices of N36.16 and N33.10 per share
respectively. Ashaka Cement and Flour Mills Nigeria followed in the
chart with an increase of N1.22 and N1.21, to close at N25.72 and
N68.01 per share.

On
the losers’ side, Dangote Cement and MRS Oil led the price losers’
chart with a loss of N4.25 and N3.50, to close at N120.25 and N66.56
per share respectively. Nigerian Breweries and Okomu Oil followed with
a decrease of 84 kobo and 69 kobo on their initial prices of N76.00 and
N13.90 per share respectively.

Active subsectors

Trading
activities in the Banking subsector maintained lead as the most active
subsectors with 165.981 million shares valued at N1.586 billion. Deals
in shares of the four banks mentioned in the most traded stocks boosted
volume in this subsector.

The
Insurance subsector followed with 30.424 million shares valued at
N21.430 million. The Food/Beverages subsector was third in the activity
chart with 26.902 million shares worth N465.808 million.

Some finance
experts have commended the Central Bank of Nigeria for its attempt to
save the naira from falling freely, especially in an era when
currencies are struggling to maintain their value.

Ayo Teriba, the
managing director, Economic Associates, a finance research and
investment advisory firm, said the Central Bank made a good decision to
help the nation’s local currency.

“I think the
Central Bank did well in helping the naira by attempting to meet the
demand for Forex at the Forex market. If they hadn’t, it would have
resulted into the conversion of a global problem into a domestic one,”
Mr. Teriba said.

He said this on
Wednesday at the firm’s one-day conference on ‘Economic and Financial
Outlook in 2011’ held in Lagos. The event was to deliberate on outlook
for global and domestic markets for 2011, the extent to which the
post-crisis economic and financial rebalancing forces that currently
dictate the pace of global demand, commodity prices, and financial
markets are expected to continue into 2011.

“We were able to
hold rates reasonably stable, even though it costs us our reserves. The
Central Bank has helped stabilise our exchange rate even though it’s at
the expense of our foreign reserves,” he added.

Sanusi Lamido
Sanusi, the Central Bank governor, has said that the regulatory body
would not allow a free fall of the nation’s currency and that it would
also endeavour to meet foreign exchange demands at the auction markets.

Fairly stable outlook

Most members of the
audience from strategic planning units of various banks, pension funds,
and other finance firms agreed that outlook for the global and domestic
economy is fairly stable.

“Output for the
global economy is positive, as far as commodity prices are concerned.
We anticipate that there could be growth next year without as much
fluctuations as we experienced this year,” Mr. Teriba said.

Participants, however, pointed out that there may be uncertainties next year from political concerns and the elections.

While accepting
that likely election risks should be anticipated, Mr. Teriba says the
financial outlook for the nation is not likely to depreciate beyond its
present level.

Akintola
Akinbamidele, a Research Analyst, Renaissance Capital, an investment
firm, says sharp political uncertainty should be anticipated, which
could restrain investor participation in some of the nation’s markets.

“One main concern
arises from the increment in recurrent spending as a percentage of
total spending, which is projected at 75 percent in 2011 versus 49
percent in 2010. With historically low execution levels of capital
projects, the much needed period of sustained high economic growth will
be delayed. Exacerbating this scenario is the “potential” laggard
effect on project execution by newly appointed public officials
following an election period.

“We are of the
opinion that post April 2011 elections and into 2012, fiscal and
monetary policy will be mirrored. Thus the outlook for lower yield
outlook in 2012 should drive significant valuation on bond prices,” he
added.

He further said
that the firm’s major catalyst for its outlook is the nation’s
continuation in the anticipated reforms in power, oil and
infrastructure.

The conference was the fourth in a quarterly series of economic event by the firm this year.